Welfare Reform Bill (Universal Credit Contingency Fund Advance)

Tuesday 26th April 2011 Written Statements

[The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)]

The Department for Work and Pensions has obtained approval for an advance from the Contingencies Fund of £18 million to allow for the development of IT for universal credit before Royal Assent. This amount is part of the proposed investment in universal credit of £2 billion agreed at the time of the spending review.

Universal credit is to replace a range of existing means-tested benefits and tax credits for people of working age, rolling out in 2013. It will improve work incentives, simplify the benefits system and tackle administrative complexity.

The Department is using a flexible approach to IT development where the build of IT components is brought forward to allow for early customer testing. The advance from the Contingencies Fund will enable an earlier move to the new simplified benefit than could be achieved without it. This enables the Department to achieve better value for money by enabling a more rapid take-up of online claims with lower operational delivery costs. Parliamentary approval for additional resource and capital of £50 million for this new service will be sought in the main estimate for the Department for Work and Pensions. Pending that approval, urgent expenditure estimated at £18 million will be met by repayable cash advances from the Contingencies Fund.